Your charitable contribution deductions are still a great tax savings tool, but they may require more planning following the passage of the Tax Cuts and Jobs Act (TCJA).
Typically, cash and non-cash charitable donations can be deducted on an itemized return. But with the standard deduction nearly doubling to $12,000 for single filers ( $12,200 in 2019) and $24,000 for married joint filers ($24,400 in 2019), itemizing every year is less beneficial for many taxpayers.
This is especially so because many other itemizeable deductions have been reduced by the TCJA, including miscellaneous itemized deductions, state and local tax deductions, and home loan interest deductions.
Leverage charitable tax planning
If you want to donate and get beneficial tax treatment, you can still make it work. Here’s how:
- Conduct a year-end tax forecast. Plan now to see how close the amount of all your yearly itemizeable items will come to exceeding your standard deduction threshold.
- Bundle two-in-one. Consider bundling two years of charitable giving into one year. This will allow you to maximize your itemizations in one year, while using the tax savings of the standard deduction in the other year to help pay for your donations.
- Maximize your charitable deduction. When you can take advantage of the charitable deduction, consider donating appreciated stock held longer than one year. This is a better alternative than writing a check as you avoid paying capital gains and you can deduct the fair market value of the stock as a donation.
Itemized deduction rules have changed, but you can still take advantage of the tax deductibility of your charitable giving. You simply need to adjust your planning. Call if you’d like to discuss this or any other tax-planning strategies.